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Changing Your Business Model?

Alert Your Customers With Meaningful Spin—or Else!

Vol. 6, Issue No. 20 | October 19, 2010 By Denny Hatch
10
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IN THE NEWS

France Asks Airlines to Cut Flights Ahead of Strikes
PARIS - The confrontation over pension reform in France deepened Monday, with strikers strangling fuel supplies at home and waving off airline flights from abroad.

The French civil aviation authority said on Monday it was asking airlines to cut flights into French airports by up to 50 percent on Tuesday because of possible strikes by personnel. Blockades of France's 200 fuel depots and strikes at most of its 12 refineries have left service stations starved of fuel. Fearful that the pumps would run dry, many motorists scrambled on Monday to fill up while they could, contributing to the pressure on supplies particularly of the diesel fuel powering many French cars.

—Alan Cowell, The New York Times, Oct. 18, 2010

Quasi-socialist France is going broke. The public trough is empty and I'm nervous.

Prior to the strike mayhem (see IN THE NEWS to the right), we bought and paid for airline tickets from Paris to Philadelphia in mid-December. How long will pandemonium prevail? Will we get home on time or, like France, will we go broke being stuck in Paris with the euro on the rise?

For generations, the French have considered it to be their God-given right to retire at age 60. In order to stay afloat, the Sarkozy government has upped the retirement age to 62.

That's not all. When a woman friend in Paris lost her job, she was eligible to receive the equivalent of 57.4 percent of her salary for up to three years, courtesy of the state. She had a job offer, but opted to double-dip—take freelance work while collecting unemployment. Plus, of course, she has universal health care, as do all French.

The only solution is for the government to legislate some major changes in its business model, and the citizenry is up in arms. It's a mini-revolution.

The point is when upheaval is necessary—in business, health, education or government—it is imperative to alert in advance those who are affected and make a powerful and persuasive argument for the change.

In the case France, the message to workers is simple:

France is running out of money. If you don't go along with this change, your pension will be pennies on the euro. What's more, your grandchildren will be forced to work until they are 75 and will hate you forever.

PHL—SFO and Return
Earlier this month we flew to and from San Francisco for the annual Direct Marketing Association Conference and Exhibition on a plain-Jane US Airways Airbus 320. No movies, no sound system, no Wi-Fi or BlackBerry allowed, no in-flight hot meal service.

At the US Airways ticket counters in both cities, we were nailed for a $25 fee per checked suitcase, which meant and immediate extra C-note added to the cost of our tickets.

For five hours—each way—we were on our own, the only amenities being free coffee, juice, soft drinks and water. Not even pretzels. Everything else was payable by credit card: snacks, simple meals and alcoholic beverages.

Other new add-on fees instituted by the airlines that are roiling travelers big time: bookings by phone, preferred seats, priority boarding and changing tickets.

Takeaways to Consider

  • Before summarily changing your business model, alert your customers with meaningful and persuasive spin—or else.
  • "Always try to convert a disadvantage into an advantage." —Elsworth Howell
  • "Always try to convert a marketing disaster into a marketing opportunity." —Lester Wunderman
  • "You've got to start thinking of air travel like taking a bus, subway or Amtrak. You have paid for a seat, and are guaranteed by the carrier to get from point A to point B. All else is extra." —Kathleen Stephenson
  • When flying, always bring enough to read, see or listen to. And then some.
  • NOTE: The new $139 Kindle that holds 3,400 titles slips into your pocket and the battery lasts a month, so you're good to go—anywhere.
  • "When you're flying, sit by the window and always have a pair of binoculars with you." —Jean Shepherd, radio raconteur, screenwriter, hoaxer, screenwriter and narrator of "The Christmas Story" and author of "In God We Trust, All Others Pay Cash"
  • It is a gift to have 10 hours of solitude to veg out, read, think, do a crossword and doze, sans BlackBerry and Wi-Fi, with no cabin crew performing intrusive food service tasks and blocking the way to the toilets with their aisle-wide carts, while passengers watching the Clint Eastwood movie give you dirty looks for leaving the window shade up and letting the sun shine in.
  • "Public relations is the business of letting people in on what you are doing." —Evelyn Lawson, former Ziegfeld Follies dancer and publicist for the Ivoryton (CT) Playhouse
  • It's a shame that the airlines (or any corporation) feel it necessary to save money by hiring piss-poor amateurs to manage their public relations.

 

Companies Mentioned:

10

COMMENTS

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Most Recent Comments:
Lawrence Hansen - Posted on October 21, 2010
Here's the reason why state subsidized healthcare is bad: My parents were self-employed. We had health insurance only to cover catastrophic stuff like accidents or serious illness. Routine trips to the doctor were paid for with a check at the end of the visit. "Wear your hat and gloves! I don't want to be paying for a doctor visit if you get sick!!" "Eat your lima beans, so you stay healthy and we don't end up in the doctor's office." We liked our family doctor because he was competent and his fees were reasonable. When he retired and the new guy who took over his practice jacked the fees considerably, though he too was a competent doctor, we went out and found another, equally competent, doctor who charged less. See how it works? When you separate paying for a service from using it, the customer ceases to exercise care and thrift. Nor is there any motivation for the service provider to control costs or set a market-based price when a third, unrelated party pays for everything. The French socialist "business" model is ridiculous: if I could get 2/3 of my salary for 3 years with full health benefits, I'd take a sabbatical from the tiresome grind of working for a living in a second. Not a sustainable model for a national economy.
Jim H - Posted on October 20, 2010
As a twice-a-month business flyer over the past couple of years, I’ve had a lot of time to contemplate the escalating "fee wars". While I think most of the new "choices" are simply not worth their cost (the latest shake-your-head moment: the offer to purchase extra FF miles at outrageously inflated prices relative to their redeemable value), I’m OK with most of them and people can make rational economic decisions about $10 sandwiches and $8 blankets. The only one that chaps me is charging for the first piece of checked luggage. Assuming you are not flying roundtrip on a single day (which accounts for perhaps 99% of passengers), everyone is bringing a piece of luggage with them - either checked or carry-on. Whether it’s stowed above your head or below in cargo, it’s still the same bag (yes, the average carry-on is perhaps a few pounds lighter than a fully-stuffed checked bag, but not by that much). If (essentially) everyone is bringing a bag, why not simply include the (admittedly real) cost of schlepping that bag in the base ticket price and dispense with the time, effort, customer frustration, etc. involved in collecting those additional fees at check-in (not to mention then avoiding the now even-more-humorous ritual of people desperately searching for overhead bin space, slowing the boarding process even further).

I fly enough to have status and, thus, avoid those darn bag fees. However, if I didn’t...
Peter Rosenwald - Posted on October 20, 2010
Another splendid (and nostalgic) piece Denny.

Two stories:

In the late 50s, a colleague and I were dispatched by our employer, The Book Find Club, to the Frankfurt Book fair. My colleague's wife was a charming French lady who contacted the airline, discovered the first class menu and duplicated (and bettered) it in a picnic basket together with superb wines. We shared this feast with fellow economy passengers with gusto. 'Airline food' is one of the great oxymorons.

One day, driving to the airport in New York I was listening to Jean Shepherd and he did a hilarious number talking about how only in America could you have a corporation named and dedicated to fulfillment. The Fulfilment Corporation of America was the take-off for his monologue and I was on the way to make my monthly visit there as they were our (American Heritage's) fulfillment provider.

Double fulfillment in both cases.
John Walters - Posted on October 19, 2010
Denny,
Your writings as always laced with good sense and beautifully put together. They read so easily that I for one often forget how difficult it is to craft such pieces. And I have hundreds of examples of my attempts prove it.

But there is one thing that I am really curious about. The almost universal American denigration of state provided health care.

You wrote about this Parisian woman who lost her job but got excellent unemployment benefits while doing freelance work. I am not commenting on the ethicality of her actions but on your closing sentence "Plus, of course, she has universal health care, as do all French."

Could you please explain to me why ensuring all its citizens has universal access to health care without regard to their income is bad? Or put another way, why is it better that people who are in comfortable economic circumstances should have immediate access to health care and those who are not have to rely on spasmodic and inconsistent charity?

You have worked hard, paid your taxes, been prudent and managed to achieve an enviable life style including, I am sure, excellent medical insurance, guaranteeing you the best medical attention when you require it. What makes people in your financial situation morally superior to a person who has worked hard but with a lower income level, paid their taxes, but even being prudent to the best of their capability cannot afford any (or adequate) health insurance?

What is wrong with the people of America saying that we are a rich and generous country and we are going to ensure that everyone of our citizens will get access to proper and adequate health care? Will having 350 million fit and healthy Americans be such a threat? And if you say your nation cannot afford it how many of those millions are you prepared to see suffer and die unnecessarily?

For how many will the warning over the entrance to Dante's Inferno be their reality while their fellow citizens look on without a care?

OK that's my rant for today. Now I had better get back to business.

Cheers

John
Wash Phillips - Posted on October 19, 2010
"Have it your way," the old Burger King selling line might be the better USP for an airline to purloin (instead of fudging around with Southwest's) Denny.
You want a meal? Pillow? Blanket? Booze? Biz Class seat? That's $X, thanks. Same goes for a bag you want us to check! Fly US and have it YOUR way!
Dev. Kinney - Posted on October 19, 2010
A fine use for "shovel ready" jobs would be to get the railroads up to date and logistically efficient. This would also be a significant environmental advance.

Airlines concerns may also be a factor in America being so far behind in digital telecom technology. Cutting services and raising consumer costs will keep America flying short term. But it will also keep us from advancing economically in the world...no matter how good the PR is.
will keller - Posted on October 19, 2010
Regarding fees and pr staffing, I bet Eddie Rickenbacker would agree with you, Denny.
-- signed a fellow sufferer (Shep fan)
Mike McCormick - Posted on October 19, 2010
Denny, Great column, thanks. Maybe the problem with France's "business model" is that business had nothing to do with it. Mike
Mat Weller - Posted on October 19, 2010
I know for me, the annoyance at the extra charges isn't that it's there, it's that it's glaringly obvious that it was tacked on as an extra fee so that the price of the ticket didn't look like it was going up, even though it was. Because if you didn't pay for bags, you still had to buy drinks in advance that were illegal to bring into the airport, so you have to buy them at food joints inside that conveniently charge at least twice what you would pay anywhere else. To me, that stuff always ends up looking double shady.

It's like ATMs at the banks. When they were introduced to the public as "these machines will be available at all hours and save us money because we don't have to employ as many tellers." So they saved all this money...and jacked up all their fees...and made it so that a savings account couldn't make more than 1% interest. Thanks for the 'added value.'

I don't mind making a sacrifice for a return--even if I don't benefit from it. Sometimes it's enough to know I helped someone else out. I do mind making a sacrifice because it will help cut costs and then being charged more for being allowed the privilege of making the sacrifice.

The good news for these companies is that if they weather it long enough, it becomes commonplace and everybody comes to accept it unless you actively mess up the PR.
Ray - Posted on October 19, 2010
France’s legal retirement age has been 60 since President Francois Mitterrand cut it from 65 after his 1981 election.

Click here to view archived comments...
Archived Comments:
Lawrence Hansen - Posted on October 21, 2010
Here's the reason why state subsidized healthcare is bad: My parents were self-employed. We had health insurance only to cover catastrophic stuff like accidents or serious illness. Routine trips to the doctor were paid for with a check at the end of the visit. "Wear your hat and gloves! I don't want to be paying for a doctor visit if you get sick!!" "Eat your lima beans, so you stay healthy and we don't end up in the doctor's office." We liked our family doctor because he was competent and his fees were reasonable. When he retired and the new guy who took over his practice jacked the fees considerably, though he too was a competent doctor, we went out and found another, equally competent, doctor who charged less. See how it works? When you separate paying for a service from using it, the customer ceases to exercise care and thrift. Nor is there any motivation for the service provider to control costs or set a market-based price when a third, unrelated party pays for everything. The French socialist "business" model is ridiculous: if I could get 2/3 of my salary for 3 years with full health benefits, I'd take a sabbatical from the tiresome grind of working for a living in a second. Not a sustainable model for a national economy.
Jim H - Posted on October 20, 2010
As a twice-a-month business flyer over the past couple of years, I’ve had a lot of time to contemplate the escalating "fee wars". While I think most of the new "choices" are simply not worth their cost (the latest shake-your-head moment: the offer to purchase extra FF miles at outrageously inflated prices relative to their redeemable value), I’m OK with most of them and people can make rational economic decisions about $10 sandwiches and $8 blankets. The only one that chaps me is charging for the first piece of checked luggage. Assuming you are not flying roundtrip on a single day (which accounts for perhaps 99% of passengers), everyone is bringing a piece of luggage with them - either checked or carry-on. Whether it’s stowed above your head or below in cargo, it’s still the same bag (yes, the average carry-on is perhaps a few pounds lighter than a fully-stuffed checked bag, but not by that much). If (essentially) everyone is bringing a bag, why not simply include the (admittedly real) cost of schlepping that bag in the base ticket price and dispense with the time, effort, customer frustration, etc. involved in collecting those additional fees at check-in (not to mention then avoiding the now even-more-humorous ritual of people desperately searching for overhead bin space, slowing the boarding process even further).

I fly enough to have status and, thus, avoid those darn bag fees. However, if I didn’t...
Peter Rosenwald - Posted on October 20, 2010
Another splendid (and nostalgic) piece Denny.

Two stories:

In the late 50s, a colleague and I were dispatched by our employer, The Book Find Club, to the Frankfurt Book fair. My colleague's wife was a charming French lady who contacted the airline, discovered the first class menu and duplicated (and bettered) it in a picnic basket together with superb wines. We shared this feast with fellow economy passengers with gusto. 'Airline food' is one of the great oxymorons.

One day, driving to the airport in New York I was listening to Jean Shepherd and he did a hilarious number talking about how only in America could you have a corporation named and dedicated to fulfillment. The Fulfilment Corporation of America was the take-off for his monologue and I was on the way to make my monthly visit there as they were our (American Heritage's) fulfillment provider.

Double fulfillment in both cases.
John Walters - Posted on October 19, 2010
Denny,
Your writings as always laced with good sense and beautifully put together. They read so easily that I for one often forget how difficult it is to craft such pieces. And I have hundreds of examples of my attempts prove it.

But there is one thing that I am really curious about. The almost universal American denigration of state provided health care.

You wrote about this Parisian woman who lost her job but got excellent unemployment benefits while doing freelance work. I am not commenting on the ethicality of her actions but on your closing sentence "Plus, of course, she has universal health care, as do all French."

Could you please explain to me why ensuring all its citizens has universal access to health care without regard to their income is bad? Or put another way, why is it better that people who are in comfortable economic circumstances should have immediate access to health care and those who are not have to rely on spasmodic and inconsistent charity?

You have worked hard, paid your taxes, been prudent and managed to achieve an enviable life style including, I am sure, excellent medical insurance, guaranteeing you the best medical attention when you require it. What makes people in your financial situation morally superior to a person who has worked hard but with a lower income level, paid their taxes, but even being prudent to the best of their capability cannot afford any (or adequate) health insurance?

What is wrong with the people of America saying that we are a rich and generous country and we are going to ensure that everyone of our citizens will get access to proper and adequate health care? Will having 350 million fit and healthy Americans be such a threat? And if you say your nation cannot afford it how many of those millions are you prepared to see suffer and die unnecessarily?

For how many will the warning over the entrance to Dante's Inferno be their reality while their fellow citizens look on without a care?

OK that's my rant for today. Now I had better get back to business.

Cheers

John
Wash Phillips - Posted on October 19, 2010
"Have it your way," the old Burger King selling line might be the better USP for an airline to purloin (instead of fudging around with Southwest's) Denny.
You want a meal? Pillow? Blanket? Booze? Biz Class seat? That's $X, thanks. Same goes for a bag you want us to check! Fly US and have it YOUR way!
Dev. Kinney - Posted on October 19, 2010
A fine use for "shovel ready" jobs would be to get the railroads up to date and logistically efficient. This would also be a significant environmental advance.

Airlines concerns may also be a factor in America being so far behind in digital telecom technology. Cutting services and raising consumer costs will keep America flying short term. But it will also keep us from advancing economically in the world...no matter how good the PR is.
will keller - Posted on October 19, 2010
Regarding fees and pr staffing, I bet Eddie Rickenbacker would agree with you, Denny.
-- signed a fellow sufferer (Shep fan)
Mike McCormick - Posted on October 19, 2010
Denny, Great column, thanks. Maybe the problem with France's "business model" is that business had nothing to do with it. Mike
Mat Weller - Posted on October 19, 2010
I know for me, the annoyance at the extra charges isn't that it's there, it's that it's glaringly obvious that it was tacked on as an extra fee so that the price of the ticket didn't look like it was going up, even though it was. Because if you didn't pay for bags, you still had to buy drinks in advance that were illegal to bring into the airport, so you have to buy them at food joints inside that conveniently charge at least twice what you would pay anywhere else. To me, that stuff always ends up looking double shady.

It's like ATMs at the banks. When they were introduced to the public as "these machines will be available at all hours and save us money because we don't have to employ as many tellers." So they saved all this money...and jacked up all their fees...and made it so that a savings account couldn't make more than 1% interest. Thanks for the 'added value.'

I don't mind making a sacrifice for a return--even if I don't benefit from it. Sometimes it's enough to know I helped someone else out. I do mind making a sacrifice because it will help cut costs and then being charged more for being allowed the privilege of making the sacrifice.

The good news for these companies is that if they weather it long enough, it becomes commonplace and everybody comes to accept it unless you actively mess up the PR.
Ray - Posted on October 19, 2010
France’s legal retirement age has been 60 since President Francois Mitterrand cut it from 65 after his 1981 election.